Engineering Economy (16th Edition) - Standalone book
16th Edition
ISBN: 9780133439274
Author: William G. Sullivan, Elin M. Wicks, C. Patrick Koelling
Publisher: PEARSON
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Chapter 3, Problem 14P
To determine
Calculate the estimated capital investment.
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The capital investment cost for a switchgrass-fueled ethanol plant with a capacity of 250.000 gallons per year is $6.6 million. The costcapacity factor for this particular plant
technology is 0.62 for capacities ranging from 200.000 gallons per year to 600.000 gallons per year. What is the estimated capital investment for a similar ethanol plant with a capac
of 550.000 gallons per year?
The estimated capital investment for a similar ethanol plant with a capacity of 550,000 gallons per year is $ (Round to the nearest ten thousands)
An Engineering consultant firm measures its output in a standard hour unit, which is a function of the personnel grade levels in the professional stuff. The variable cost is $62 per standard service hour. The charge-out rate (i.e., selling price) is $85.56 per hour. The maximum output of the firm is 160,000 hours per year, and its fixed cost is $2,024,000 per year. For this firm:
(a) What is the breakeven point in standard service hours and in percentage of total capacity?
(b) What is the percentage reduction in breakeven (sensitivity) if fixed costs are reduced 10%; if variable cost per hour is reduced 10%; and if the selling price per unit is increased by 10%.
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A company is analyzing a make-versus-purchase situation for a component used in several products, and the engineering department has developed these data: Option A: Purchase 10,000 items per year at a fixed price of $8.50 per item. The cost of placing the order is negligible according to the present cost accounting procedure. Option B: Manufacture 10,000 items per year, using available capacity in the factory. Cost estimates are direct materials = $5.00 per item and direct labor = $1.50 per item. Manufacturing overhead is allocated at 200% of direct labor (= $3.00 per item). Based on these data, should the item be purchased or manufactured?
Chapter 3 Solutions
Engineering Economy (16th Edition) - Standalone book
Ch. 3 - Prob. 1PCh. 3 - Prob. 2PCh. 3 - Prob. 3PCh. 3 - Prob. 4PCh. 3 - Prob. 5PCh. 3 - Prob. 6PCh. 3 - Prob. 7PCh. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prepare a composite (weighted) index for housing...Ch. 3 - Prob. 10P
Ch. 3 - Prob. 11PCh. 3 - Prob. 12PCh. 3 - Prob. 13PCh. 3 - Prob. 14PCh. 3 - Prob. 15PCh. 3 - A biotech firm is considering abandoning its old...Ch. 3 - Prob. 17PCh. 3 - Prob. 18PCh. 3 - Prob. 19PCh. 3 - Prob. 20PCh. 3 - Prob. 21PCh. 3 - Prob. 22PCh. 3 - Prob. 23PCh. 3 - Prob. 24PCh. 3 - Prob. 25PCh. 3 - Prob. 26PCh. 3 - Prob. 28SECh. 3 - Prob. 31CSCh. 3 - Prob. 32CSCh. 3 - Prob. 36FECh. 3 - Prob. 37FECh. 3 - Prob. 38FECh. 3 - Prob. 39FECh. 3 - Prob. 40FECh. 3 - Prob. 41FE
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- An engineering consulting firm measures its output in a standard service hour unit, which is a function of the personnel grade levels in the professional staff. The variable cost (cv) is $62 per standard service hour. The charge-out rate [i.e., selling price (p)] is $85.56 per hour. The maximum output of the firm is 160,000 hours per year, and its fixed cost (CF ) is $2,024,000 per year. For this firm, (a) what is the breakeven point in standard service hours and in percentage of total capacity? (b) what is the percentage reduction in the breakeven point (sensitivity) if fixed costs are reduced 10%; if variable cost per hour is reduced 10%; and if the selling price per unit is increased by 10%?arrow_forwardThe capital investment cost for a switchgrass-fueled ethanol plant with a capacity of 250,000 gallons per year is $6 million. The cost-capacity factor for this particular plant technology is 0.59 for capacities ranging from 200,000 gallons per year to 500,000 gallons per year. What is the estimated capitalinvestment for a similar ethanol plant with a capacity of 450,000 gallons per year?arrow_forwardA manufacturing company needs to know whether to produce components for a Bird Feeder in-house or buy the components from a fabricator. To make the components in-house, the company needs to buy an injection molding machine, which costs $9,000. The company expects to produce 10,000 units per year. The following estimates have been made: Fixed cost per year Variable cost per part Make $9,000 $6.45 Buy. $0 $7.20 a. What is the break-even point? b. If the number of units produced is 10,000, which option is cheaper: Make or Buy? Explain why. b. If the number of units produced is increased to 12,500, which option is cheaper: Make or Buy? Explain why.arrow_forward
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